Moving truck with overlaid rising and lowering numbers symbolizing the fluctuations in the parcel market, with the title 'State of the Parcel Market

State of the Parcel Market

by LJM Group

Insights to Strengthen Your Hold in a Shifting Landscape

As businesses recover and emerge from the crippling costs and constraints imposed by Carriers during the pandemic, it pays to keep a close watch on key market factors that can threaten profitability. Supply chain disruption and strikes continues to be a real concern as labor negotiations struggle along in the railway industry, as well as between the International Longshore and Warehouse Union and Pacific Maritime Association. Meanwhile, industry forecasters are predicting an unexpected Compound Annual Growth Rate (CAGR) of up to 10% from 2023 to 2028 that will explode the Carrier and Parcel market.

Leave No Cost Unturned – With General Rate Increases (GRI) hitting the market, compounded with rising fuel prices and the complex fluctuations of Carrier fees and shipping costs, it’s critical to identify every area that affects profitability. Conduct parcel invoice audits to reveal shipping errors or compliancy issues and recover lost dollars. Use shipping logistics to provide the most cost-effective  processes and identify expensive inefficiencies. Implement programs that reveal true parcel costs and uncover hidden accessorial fees and disguised Carrier charges.

One of the most important strategies to consider in today’s market is Carrier contract negotiation. With Carriers now facing slower demand and overcapacity, businesses are in a much stronger negotiating position. The second half of 2023 is a propitious time for businesses to review parcel management with a goal to solidify more beneficial contract rates and terms. A professional logistics advisory consultant like those at LJM Group can be of huge value with negotiations, as we have the technology needed to collect and analyze volume, location, inventory, customers, and other data that can be used to negotiate the best possible contract for you.

Keep Fuel in Hyperfocus – For many businesses, fuel accounts for almost 20% of shipping costs in 2023. Compare this to 8% in 2021, and it becomes clear that fuel must be closely considered as a parcel makes its way from the shipper to the customer. The best way to do this is by implementing automated transportation and parcel management systems. These logistics programs use advanced software to analyze and identify the least expensive shipping options, packaging, routes, and more.

Follow Carrier Conditions – Big players continue to pull the market strings in 2023, making it essential for businesses to keep watch on Carrier negotiations, alliances, strikes, and power moves. For example, there are indications that Maersk and MSC will not renew their alliance agreement, and Amazon is still considering becoming a player in the shipping market. Even one ruling like California’s AB5 law that advocates for independent truckload owner operators to be reclassified as employees can impact the supply chain. Staying on top of Carrier news will help parcel managers adjust their shipping strategies if the need arises.

Tech Is No Longer a Luxury – Logistics technology will continue to drive success for e-commerce businesses, and research indicates that digital solutions and advanced software are essential for success in today’s market. Businesses simply cannot stay competitive in an increasingly complex digital supply chain without sophisticated logistics solutions that increase overall operational efficiency, control costs, and meet customer demands.

In today’s uncertain and shifting market, businesses can thrive by remaining resilient in the face of supply chain conditions. Shippers must keep a close watch on market conditions and pivot as needed to maintain control of costs. Logistics technology is key to staying profitable in 2023 for its power to identify and establish an automated process for cutting costs. Most important, this is a time when businesses can regain leverage with Carriers, negotiate more favorable contracts, and strengthen relationships to ensure a solid foundation moving forward.  


Sign up for our newsletter to be the first to hear about our live webinars and new ways to reduce shipping expenses, and to keep up with the latest must-know developments in parcel shipping and logistics.
© 2024 LJM Group - Small Parcel, FedEx & UPS Invoice Auditing, Contract Negotiating & Consulting • 312 Conklin Street, Farmingdale, NY 11735